Hiring a Contractor – What Insurance Coverage Should You Require?

Imagine if your contractor got hurt while working on your home and wasn’t able to finish the job. A week or two later you get a letter in the mail, it isn’t the refund check you were expecting but a lawsuit demanding that you pay for the contractor’s injuries. What just happened? Keep reading to find out, along with why you need to make sure the contractor is insured to keep this from happening to you.

Lawsuit Risk #1: The Contractor Suing You for Their Injuries

Contractors are a mix of people who are financially successful or just scraping by. If a contractor with no insurance and no savings gets hurt in your home, their only possible way to get their bills paid may be to sue you for their injuries.

Workers’ compensation insurance provides contractors with coverage for on the job injuries. However, some contractors don’t carry this coverage because Arizona doesn’t require it for working partners, independent contractors, or sole proprietors. Before hiring a contractor, you should insist that they do provide proof of coverage to ensure that they have protection against injuries.

Lawsuit Risk #2: The Contractor Injures Your Neighbor

It’s not too hard to imagine a retired neighbor that insists on watching your contractor work, and offering help. It’s also not hard to imagine that neighbor stepping on a nail, tripping over materials, or hurting themselves in some other manner. Do you know who be on the hook for damages? That’s right, the homeowner. If the contractor doesn’t have proper insurance in place, you may be the one paying for medical bills and other damages.

Commercial general liability coverage provides direct protection so that if something does happen on the jobsite, your neighbor can recover their loss through your contractor’s insurance company.

Lawsuit Risk #3: The Contractor Damages Your Neighbor’s Property

Another scenero that isn’t too hard to imaging is your contractor damaging your neighbor’s windows, sprinklers, driveway, or other property as they move heavy tools and materials around the jobsite. Like personal injuries, your neighbor’s can hold you responsible for your contractor’s actions.

Commercial general liability coverage also covers these types of property damage claims.

Lawsuit Risk #4: The Contractor Hits Someone with Their Vehicle

Mishaps involving vehicles are a little trickier. If the contractor is driving down the street, that might be considered outside of your control and not your responsibility. If they’re driving around your property while actively doing work, you might be responsible. To avoid any doubts, make sure you’re insured for these types of accidents.

Most commercial general liability policies don’t include auto accidents, so you’ll need to ask for proof of commercial auto coverage from your contractor.

Ask for a Certificate of Insurance

Don’t take a contractor’s word that they’re insured even if they have great reviews. You could end up out thousands of dollars or even losing your home in the case of very serious injuries. Always ask to see the contractor’s certificate of insurance.

Your insurance agent can help you understand what coverage to ask for and also to check that your own coverage provides enough protection. Imes Insurance Associates is a local agency that understands the unique needs of the greater Phoenix area. Give us a call today to discuss your insurance needs for your upcoming home improvement project.

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